Tag: Lending

Dialing for Dollars: Solving CBDC’s Equality Conundrum

~ Karen Petrou ~ 1 Comment

By Karen Petrou

  • CBDC advocates tout its inclusiveness, but the digital divide is a profoundly exclusionary impediment to CBDC access for LMI, disabled, older, and rural households. 
  • Centralized deposit-taking and payments via the Post Office and/or Fed pose challenges to personal privacy and even freedom of expression that, if not averted in initial design, could come to pose significant political and governance risk.  Lack of private competition also presents discrimination risk based on pricing or other terms not subject to outside scrutiny.
  • If CBDC succeeds as some envision it, then lending will come either from the federal government – Big Brother problems of still more concern – or capital-markets sources outside the perimeter of safety-and-soundness and often also consumer-protection regulation and enforcement.
  • A CBDC in which the Fed acts as an open-source utility corrects for many current inclusion, governance, and intermediation obstacles to payment-system speed and efficiency. 
Continue reading “Dialing for Dollars: Solving CBDC’s Equality Conundrum” →

Do Credit Unions Give Credit Where Equality is Due?

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By Karen Petrou

U.S. credit unions in 2019 are far from the proverbial church-basement financial clubs – now, credit unions are a $1.5 trillion sector of the U.S. financial industry.  Given the extent of the U.S. equality crisis, $1.5 trillion dedicated to affordable, sustainable financing would not only adhere to the 1934 statutory mission that binds credit unions to this day, but also make a heck of a difference for low-and-moderate income households.  Do credit unions in fact adhere to their mission and thus earn the sweeping tax and regulatory benefits taxpayers provide to encourage them to do so?  A new Federal Financial Analytics study* finds that credit unions sadly fall far short. Continue reading “Do Credit Unions Give Credit Where Equality is Due?” →

This Little Equality Goes to Market

~ Karen Petrou ~ 1 Comment

By Karen Petrou

After crafting the initial features of the post-crisis bank-regulatory framework, global and U.S. policy-makers were dumbfounded to discover that costly new rules changed the competitive financial-market balance.  Mirabile dictu, when costs rose for banks, banks changed their business model to cling to as much investor return as possible instead of, as regulators apparently expected, taking it on the chin to ensure ongoing financial-service delivery at whatever pittance of a profit remained.  As markets rapidly and in some cases radically redefined themselves, global regulators dubbed the beneficiaries of this new competitive landscape “shadow banks.”  At the most recent meeting of the FSB Plenary, they changed   shadow banks to the less stealthy moniker of “non-bank financial intermediaries.”  A new BIS working paper shortens the scope of shadow banking to “market-based finance,” going on to assess a fundamental question:  does the transformation of financial intermediation from banks to non-banks alter the income and equality landscape?  The answer:  It’s complicated. Continue reading “This Little Equality Goes to Market” →